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When Free Really Isn’t

Everyone likes free stuff. Free ice cream, free t-shirts and, yes, even in the world of technology, free stuff is much appreciated.

In enterprise technology, however, free is not as simple as accepting an ice cream cone. There are considerations that need to be made when accepting a vendor’s “free” offer, to be sure you’re really getting true value. In the world of Unified Communications, Cisco recently announced that it was making its Jabber IM and presence technology available at no additional licensing cost to its customers. While on the surface this appears to be a free offer, IT professionals need to understand what this move truly means from a business perspective. It really is too good to be true.

Unified Communications can be often judged solely in terms of capital expenditures. The PBX, phones, and other peripheral software and hardware costs can become the basis for a bidding war with aggressive discounting. However, the key consideration of value here needs to be the total business impact a solution has over its lifespan. This includes the capital and operational costs of new Unified Communications solutions, such as network upgrade costs, implementation and ongoing system management that can often be ignored. As more companies look to improve their communications, IT needs to keep in mind the increasing complexity of status quo technology that creates support and management burdens on the enterprise.

ShoreTel has been able to demonstrate to numerous CIOs that Cisco’s capital cost is less than 10 percent of the product’s total financial impact over a 7-10 year period. With such a low upfront percentage of total cost and also accounting for “free,” IT needs to remember that significant business decisions cannot be based solely on initial purchase price. We have helped our partners close many deals where the ShoreTel proposal is significantly more than the initial Cisco price, but where the customer understands the significant long-term TCO implications of buying Cisco.

The recent Aberdeen study on UC and TCO confirms that it is critical to measure the long-term benefits and costs of alternative UC solutions. ShoreTel, as an ecosystem, competes on value, not price – which is how we can continue to sustain the industry’s lowest TCO. It’s also why ShoreTel has the highest gross margins in the industry and consequently why we are able to spend 20 percent of our revenue on future innovation.